A draft bill proposed by the government of Prime Minister Xavier Bettel would raise the ceiling of the single-parent tax credit from €1,500 to €2,505.
This €1,005 boost is coupled with an increase in the adjusted taxable income for claiming the single-parent tax credit, up from €35,000 to €60,000.
“In other words, taxpayers with adjusted taxable income between €0 and €60,000 will now be entitled to claim a single-parent tax credit of €2,505,” the government explains. This adjustment will thus increase the number of people who can benefit from it.
The single-parent tax credit will be degressive for single parents earning more than €60,000 per year. For people earning at least €105,000 per year, the minimum amount will be €750.
Finally, the government proposes to raise the threshold at which “allowances of any kind (except orphan’s pensions and family benefits)” reduce the single-parent tax credit to €2,424 (+€216). This corresponds to “a monthly amount of €202,” according to the text.
In the case of alimony, the Ministry of Finance notes that “alimony paid by the other parent who does not live or no longer lives with the child does not reduce the single-parent tax credit if the alimony does not exceed the amount of €2,424 per year.” Conversely, those who pay alimony for a child who is not part of their household will be able to claim a maximum allowance of €4,422 (+€402).
Speaking to our colleagues from RTL.lu, the president of the Luxembourg Confederation of Christian Trade Unions (LCGB) Patrick Dury stated that this measure is “a step in the right direction.” But Dury also said that he would still prefer a global tax reform for the whole population. The president of the General Confederation of the Civil Service (CGFP), Romain Wolff, made similar remarks, stating that the measure is merely “a drop in the ocean.”
However, the Prime Minister once again postponed a major tax reform, promised by the coalition but on hold for several years. “It would be irresponsible to finance a major tax reform today on credit and at the expense of future generations,” Bettel said in his state of the nation address.
In the short term, single parents and the rest of the population will have to rely on the government’s emergency measures.
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